Foodwatch: German TTIP study ‘utopian’

Consumer rights NGO foodwatch sharply criticised a German Development Ministry study on TTIP, saying the planned EU-US free trade agreement is a poverty scheme for the world’s poorest countries, and is an “interest-driven sham”. EURACTIV Germany reports.

The Transatlantic Trade and Investment Partnership (TTIP) presents unexpected opportunities for growth in developing countries, predicts a recent study conducted by the Munich-based ifo Institute on behalf of the German Development Ministry (BMZ).

But the consumer rights NGO foodwatch disagrees with the assessment. “The study is based on utopian and unrealistic assumptions. TTIP in its planned form is and remains a poverty scheme for developing countries. Whoever argues otherwise is spreading interest-driven information,” foodwatch spokesman Martin Rücker told EURACTIV Berlin.

The ifo study refutes the concern voiced by numerous critics, that TTIP will push smallholders in the Global South further into destitution. Due to its sheer size, the Transatlantic trade union may wipe out the chances of economic competitors in third countries.

But to a certain extent there would be a “spillover effect”, the study indicated. Growth increases in the EU and the United States would considerably raise demand for goods and services from developing and newly industrialising countries, the study assured.

“With this study, we are sounding the all-clear. The effects on developing and newly industrialising countries are relatively harmless,” said ifo analyst Gabriel Felbermayr at the presentation of the study at the end of January.

But to produce the “spillover effects”, as they are referred to in the study, TTIP negotiators must adjust the right screws, Felbermayr explained. Among other things, the EU and United States must ensure that certain customs duties are removed for third countries and that the World Trade Organization (WTO) is reformed.

“These recommendations are largely unrealistic, are not at all on the political agenda or are subject to the decision-making power of third parties. In this way, an entire collection of utopian assumptions cancels out the expected negative effects. That is a sham,” Rücker stated.

So far, the TTIP mandate does not entail including developing countries at the negotiating table. This is even indicated by the ifo study, when it says, “development policy compatibility is not explicitly outlined in the targets of the agreement”.

Another point of criticism levelled by foodwatch concerns the study’s methods. Besides assessing already-published studies, the ifo Institute also conducted interviews with various experts in the field.

In these interviews, businessmen – in other words, potential winners in the TTIP deal – present the position that the negative effects from TTIP are “not significant”.

Although these statements may not be based on perfect calculations, they are indicative of the overall message of the study, Rücker said.

“BMZ study hopes to repair TTIP’s negative image”

“Apparently the German government hopes to repair TTIP’s negative image with the study,” the foodwatch spokesman said, referring to previous studies which depicted TTIP in a much more sceptical light – such as a 2013 study conducted on behalf of the Bertelsmann Stiftung.

There, the ifo Institute – also under Felbermayr’s leadership – had warned of “dramatic” losses for developing countries and determined that individuals in countries like Guinea could count on a real income loss of -7.4%, with workers in Botswana expected to sustain -4.1% decline in earnings.

Foodwatch is calling on the German government and the European Commission to stop TTIP negotiations with the United States. “We are not fundamentally against free trade. But after the agreements met so far among negotiators, TTIP is unfair in many respects. We must start over again,” Rücker said.

But the European Commission supports TTIP. According to Marc Vanheukelen, head of DG Trade, the agreement will even lead to considerable increase in wealth in developing and newly industrialising countries. “With TTIP, in most cases products will only need to be in line with one standard. For exporters to the transatlantic market that will lead to a simplification of life. We might eliminate 50% of non-trade barriers, a big bonanza for third country producers,” Vanheukelen chimed.

German Development Minister Gerd Müller is also convinced of the chances the free trade agreement will supposedly offer. “TTIP provides the unique opportunity to structure globalisation in a more fair way. We want to set ecological and economic minimum standards for the entire world,” Müller said.

The ifo study is an “independent basis for discussion”, which will contribute to objectivity in the debate, the Development Minister indicated.

But foodwatch is not so sure. In a position paper, the NGO writes, “the same Federal Government that complained about a lack of transparency in the TTIP negotiations is remaining silent over the effects of TTIP for developing countries and now is pretending there is no problem at all – with the help of a study, that clearly exceeds the bounds of uncertainty.”

Background

Negotiations between the US and the EU on the Transatlantic Trade and Investment Partnership (TTIP) started in July 2013 and recently concluded their sixth round of talks.

Since negotiations started in 2013, a new European Parliament has been formed which is markedly more Eurosceptic than the previous one and more likely to oppose free trade.

If successful, TTIP would cover more than 40% of global GDP and account for large shares of world trade and foreign direct investment. The EU-US trade relationship is already the biggest in the world. Traded goods and services are worth €2 billion.

TTIP would be the biggest bilateral trade deal ever negotiated, resulting in millions of euros of savings for companies and creating hundreds of thousands of jobs. It is claimed that average European households would gain an extra €545 annually, and that Europe's economy would be boosted by around 0.5% of GDP, if such a deal was fully implemented.

Brussels and Washington have set the ambitious goal of completing negotiations by the end of 2014.